Category: Data Source
From the comments
Steve S writes:
Steve Entin at the National Center for Policy Analysis has written on the very issue of the subsidies vs the tax exclusion. His conclusion:
Adding the subsidies for premiums and cost sharing, the family getting the health exchange policy would receive a total subsidy of $17,400, while the family receiving employer-based insurance would receive a total subsidy of $4,143.
That is a huge differential. The whole piece is here: http://www.ncpa.org/pdfs/Health-Insurance-Exchange-Subsidies-Create-Inequities.pdf
File under "Not a political equilibrium."
Fairtest
Tim Harford gives his stamp of approval to randomized trials:
What is missing is the political demand for tests of what really works. Too many policies on education, welfare and criminal justice are just so much homeopathy: cute-sounding stories about what works leaning more on faith than on evidence. Politicians and civil servants, faced with some fancy new idea, should get into the habit of asking for a proper randomised trial. And we, as citizens, should be equally demanding….
We’ve had FairTrade coffee – what about FairTest policies? Most voters don’t know much about randomisation or trial protocols, but they’ll know when they see the FairTest logo that a policy has had a proper, scientific test to see if it works.
See the Tragedy of the Commons
Warning: Stefan Geens, an expert in the use of Google Earth, has taken a close look at the Zimbabwe photos and he argues that they are the unfortunate result of misinterpreting Google post-processing and updating. I am not an expert but at the present moment I find his analysis compelling and I have taken down the powerpoints in which I incorporated the flash animation produced by the Center for Global Development.
A few points of importance. First, the sharply delineated lines in the photos dividing communal and privately owned land is real and is evidence consistent with the tragedy of the commons. Geens writes to me:
The observation that the communal farmland seems worse off than the private farmland is a plausible one. And since the Landsat imagery could well have been taken around the year 2000 (or even earlier), Richardson's image can reasonably be used to support the thesis that communal farmland is not as well managed as private land.
What cannot be supported is the "animation" aspect which appears to show but in fact does not show a change over time.
I should note that I have no reason to think that there was any malfeasance on the part of the Center for Global Development, a great organization, or Craig Richardson who originally brought attention to the photos. Indeed, my reading of Geens is that without some expert help it would be hard not to make some errors in interpreting Google images, which have a more complicated provenance than one would imagine. In addition, Richardson emailed me that he showed the images to farmers and government agriculture officials in Zimbabwe who agreed that they were representative of what was going on on the ground. (See also Geens on this point noting burning.) Nevertheless, although the redistribution of land in Zimbabwe clearly led to a drop in productivity and output, the animation is not evidence on this point.
One interesting point about this episode is that the story and the flash animation have been on the CGD website for several years but the huge exposure of MR means that we can draw on the expertise of many people around the world. Although I put some work into putting the powerpoints together I am pleased that we were able to correct this so quickly.
Original post follows but with PPs deleted.
—-
In 2000 Zimbabwe began to forcibly redistribute land from private but predominantly white-owned commercial farms to much poorer black farmers who toiled on communal lands. Stunning pictures from Google Earth collected by Craig Richardson show the result.
Take a look at the Before picture. The communal land on the left is dry, dusty and unproductive compared to the private farmland on the right which is green and dotted with blue ponds and lakes. Why? There were two theories to explain this difference.
- The Tragedy of the Commons – the farmers on the communal lands did not have the incentives to invest in the land and thus the land eroded and turned to desert.
- The land on the right (which was owned mostly by whites) was better quality land.
Both theories could be true. Regarding the latter explanation, however, notice that the dry communal lands on the left are sharply delineated from the green private farms on the right–so sharply that soil quality and rainfall alone are unlikely to explain the difference.
So what happened after the land was redistributed beginning in 2000 and all of it made communal?
Click on the arrow to progress between before and after photos
After reform the land quality worsened everywhere. In particular, note that the blue lakes and ponds on the right became dry and empty as farmers no longer had an incentive to invest in maintaining these resources. The tragedy of the commons.
This excellent visual look at the tragedy of the commons was produced by
Todd Moss at The Center for Global Development based on pictures and
ideas from Craig Richardson. Of course Zimbabwe had many problems before and after this forcible land redistribution. You can find more pictures, background information and a lengthier discussion of this episode here.
Are economics students happier? One estimation from Germany
Michael Tamada sent me notice of a recent study, by Justus Haucap and Ulrich Heimeshoff:
A pair of German economists note that while scholars in their field have vigorously begun analyzing the economics of happiness, no one has studied the happiness of economists themselves. Not till now, anyhow.
Justus Haucap, of Heinrich Heine University of Düsseldorf, and Ulrich Heimeshoff, of the University of Bochum, surveyed 918 students of economics and other social sciences in 2005, then estimated how studying each of the different fields affected individual life satisfaction. They reported their results in a paper titled, "The Happiness of Economists: Estimating the Causal Effect of Studying Economics on Subjective Well-Being."
The news is good – for economics students, anyhow. Applying "innovative instrumental variable methods developed in labor and conflict economics," the researchers identified a positive relationship between the study of economics and individual well-being.
That's German students they surveyed, not American students. The researchers also report that self-described political conservatives (in the German sense) report lower levels of happiness.
They do control for career prospects but if you go to p.9 I do not understand why they chose the instrumental variables they did. The paper itself is here.
The Mystery of Sudden Acceleration
Here is Ted Frank on the Toyota sudden acceleration problem.
The Los Angeles Times recently did a story detailing all of the NHTSA reports of Toyota “sudden acceleration” fatalities, and, though the Times did not mention it, the ages of the drivers involved were striking.
In the 24 cases where driver age was reported or readily inferred, the drivers included those of the ages 60, 61, 63, 66, 68, 71, 72, 72, 77, 79, 83, 85, 89–and I’m leaving out the son whose age wasn’t identified, but whose 94-year-old father died as a passenger.
These “electronic defects” apparently discriminate against the elderly, just as the sudden acceleration of Audis and GM autos did before them.
Statistical Addendum: A number of commentators are worried about selection effects (hat tip Don). Here is background information from FARS. In 2008 there were 50,186 drivers involved in a car accident with a
fatality. Of these 8066 were 60 years of age or over. Thus in 2008 the
probability that a driver in a car accident with a fatality was 60
years of age or over was 16%. Using the figures above the probability
that a driver in a car accident involving sudden acceleration in a Toyota was about
54%. Of course, the sample size is very small.
Important sentences
Most U.S. citizens, for example, probably don't realize that their country exports as much to Latin America as to the entire European Union.
The full article is here.
Academic wage stickiness
The percentage of faculty members receiving no salary increase this year is 21.2 percent, while 32.6 percent had their salaries reduced, with a median decrease (among those who saw a decrease) of 3 percent.
Here is more information. I see the overall trend as toward lower wages, with many cut-deserving people put at zero to shut them up. We'll see how long they stay there.
More good news about Africa
This time it is from Alwyn Young:
Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.
I thank an MR commentator for the pointer. Addendum: Link is now corrected.
Department of Yikes
According to USA Today:
Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.
These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.
Thus, if these numbers are to be believed, federal workers on average earn in wages and compensation 50% more than workers in the private sector doing the same job. Bear in mind that the federal workers are paid by the private sector workers. We can't all be insiders.
The figures do seem large to me, however, and they do not correct for a variety of factors such as age or experience so take them with a grain of salt.
Los Angeles fact of the day
Not since the Beach Boys were in peach fuzz and crew cuts has it been so safe to live and play in the City of Angels. Believe it: you are more likely to be murdered in Columbus, Ohio, or Tulsa, Okla., than in the nation’s second most populous city.
Even Omaha, Nebraska now has a higher murder rate. Here is more.
African poverty is falling
Xavier Sala-i-Martin and Maxim Pinkovskiy report:
The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.
Not only has poverty fallen in Africa as a whole, but this decline has been remarkably general across types of countries that the literature suggests should have different growth performances. In particular, poverty fell for both landlocked as well as coastal countries; for mineral rich as well as mineral poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below or above median slave exports per capita during the African slave trade. Hence, the substantial decline in poverty is not driven by any particular country or set of countries.
The elasticity of natural disaster deaths with respect to income
Matt Kahn has a good paper (and here) on this topic:
Using a new data set on annual deaths from disasters in 57 nations from 1980 to 2002, this paper tests several hypotheses concerning natural disaster mitigation. While richer nations do not experience fewer natural disaster events than poorer nations, richer nations do suffer less death from disaster. Economic development provides implicit insurance against nature’s shocks. Democracies and nations with higher quality institutions suffer less death from natural disaster. The results are relevant for judging the incidence of a Global Warming induced increase in the count of natural disaster shocks.
Claims about China which I had not heard before
I am not vouching for this, but it is worth considering as part of the saga of Austro-Chinese business cycle theory:
…the size of the Government’s debt is vastly understated. Not included in the public debt figures are the liabilities of the local governments, which the Ministry of Finance estimated at $680bn as of the end of 2008. In addition to that, a large part of the loans extended this year (estimated at $350bn) went to finance public infrastructure projects guaranteed by local governments. Furthermore, when the Chinese government bailed out its banking system in 2003, it set up Asset Management Companies that issued bonds to the banks at par for the non-performing loans that were transferred to them. These bonds, worth about $260bn, are explicitly guaranteed by the Ministry of Finance and the Central Bank and sit on the balance sheets of the big four banks. The Chinese government also explicitly guarantees $400bn worth of debt of the three “policy banks”. In total, these off-balance sheet liabilities are equal to $1.7tn, which would bring China’s public debt to GDP ratio up to 62%, a level that is comparable to the Western European average.
Of course guaranteeing a bond is not the same as owing money yourself.
Insiders, Outsiders and Unemployment
From today's NYTimes:
The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan….
Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class.
At a time of 10% unemployment when real wages need to fall this is bad business cycle policy. I am more worried, however, about the long term consequences of creating a dual labor market in which insiders with government or government-connected jobs are highly paid and secure while outsiders face high unemployment rates, low wages and part-time work without a career path.
Long-term unemployment is at shockingly high levels which in itself creates a dynamic of persistence because the longer a worker is unemployed the less employable they become (in part due to loss of human capital and signaling problems). Thus, getting these workers back to work is going to be hard enough as it is. Labor regulations which raise wages and make hiring and firing workers even more costly will make re-employing the long-term unemployed even more difficult.
Moreover, once an economy is in the insider-outsider equilibrium it's very difficult to get out because insiders fear that they will lose their privileges with a deregulated labor market and outsiders focus their political energy not on deregulating the labor market but on becoming insiders–see Blanchard and Summers on hysteresis in unemployment and more recently Larry Ball here. Many European economies found themselves stuck in the insider-outsider equilibrium and as a result unemployment levels in places like France and Italy hovered at 9% or more for decades.
Addendum: For a personal perspective see also Eric Raymond today in a post titled Marginal Devolution. Hat tip on the latter to Arnold Kling who also comments.
Sources of funding for Nobel Prize work
Athina Tatsioni, Effie Vavva, and John P. A. Ioannidis have an interesting new paper:
Funding is important for scientists’ work and may contribute to exceptional research outcomes. We analyzed the funding sources reported in the landmark scientific papers of Nobel Prize winners. Between 2000 and 2008, 70 Nobel laureates won recognition in medicine, physics, and chemistry. Sixty five (70%) of the 93 selected papers related to the Nobel-awarded work reported some funding source including U.S. government sources in 53 (82%), non-U.S. government sources in 19 (29%), and nongovernment sources in 33 (51%). A substantial portion of this exceptional work was unfunded. We contacted Nobel laureates whose landmark papers reported no funding. Thirteen Nobel laureates responded and offered their insights about the funding process and difficulties inherent in funding. Overall, very diverse sources amounting to a total of 64 different listed sponsors supported Nobel-related work. A few public institutions, in particular the U.S. National Institutes of Health (with n=26 funded papers) and the National Science Foundation (with n=17 papers), stood out for their successful record for funding exceptional research. However, Nobel-level work arose even from completely unfunded research, especially when institutions offered a protected environment for dedicated scientists.
I thank Michelle Dawson for the pointer.